In a statement, the American company declared: "Any partnership with a club or federation has to be mutually beneficial and the terms that were on offer for a renewed contract did not represent good value for Nike's shareholders.

"We are proud to have partnered with them for the last 12 years and will continue to sponsor the club until the end of the season."

Nike's decision will clear the way for German giant Adidas to make a lucrative deal with the 20-time English champions.

Media reports had suggested previously that the two had held talks over a £60million-per-year deal.

A move from American firm Warrior - who currently produce Liverpool's kits - has also been mooted.